(Reuters) – FedEx on Thursday announced the long-awaited spinoff of its less-than-truckload freight division as it looks to restructure its operations and focus more on its core delivery business, sending shares in the package delivery giant up as much as 10% in trading outside office hours.
Analysts believe the spinoff could unlock up to $20 billion in shareholder value while paving the way for FedEx management to focus on restructuring, potentially boosting long-term growth prospects for its core package business and some will become a separate freight company.
FedEx Freight is the largest U.S. provider of less-than-truckload services, which carry multiple shipments from different customers on a single truck; The shipments are then routed through a network of service centers, where they are transferred to other trucks with similar destinations.
FedEx also said second-quarter adjusted profit fell to $0.99 billion, or $4.05 per share, from $1.01 billion, or $3.99 per share, a year earlier. According to LSEG, the latest quarter’s results exceeded analysts’ average earnings expectations of $3.90 per share.
Memphis-based FedEx also lowered its full-year earnings outlook, calling for adjusted earnings of $19 to $20 per share. In September, FedEx lowered the top end of its full-year adjusted operating income to between $20 and $21 per share, down from the previous range of $20 to $22 per share.
(Reporting by Lisa Baertlein in Los Angeles and Abhinav Parmar in Bengaluru; Editing by Alan Barona and Aurora Ellis)
